The personal blog of Reyn Bowman, a Durham NC resident, 40-year veteran of community-destination marketing and still an explorer in community sense-of-place. Opinions expressed here are those of the author.

Wednesday, July 16, 2014

Access to Opportunity - The Downside of Proliferation

As Mugs and I drive on cross country road trips each year, some places where we stop for gas will have mini-gambling casinos attached to the convenience store.

Gambling was common in places such as Idaho up until I was born, but limited to slot machines and table-card games in bars or the entrance to restaurants with a bar. Voters outlawed them there in the 1940s with a constitutional amendment.

Legalized gambling goes back to Colonial times but scarcity created modern casino havens such as Las Vegas as much or more than promotion or investment by gangsters.

But gambling casinos began popping up across the country when Congress passed the 1988 Indian Gaming Regulatory Act, a few months before I arrived in Durham, NC and midway through my now concluded, forty-year career in community marketing.

The Act has not been a boon to tourism nor to economic development. Around 8-in-10 of the patrons of this proliferation are local or in-state patrons, making them the antithesis of economic development.

At the end of this week, community marketing execs from across the globe will gather in Las Vegas to celebrate the 100th anniversary of their association. I’m not sure why they chose Las Vegas since it’s not the site of the first DMO and certainly not because it reflects what DMOs are about at their most elemental level, guarding sense of place.

The first hotel-casino complex opened in 1932, but Las Vegas as a destination for gambling launched later as other states such as Idaho banned it.

That’s an image of the Strip at the time I was born.

Long ago, Las Vegas surrendered its sense of place to fantasy but at least it leveraged it into actual economic development, even if it is at the expense of stoking a gambling problem among residents several times the national average.

Vegas and Atlantic City once drew 85% of their patrons from out of state according to an excellent article this month in Pacific Standard by Philadelphia researcher and journalist Jake Blumgart.

One of the hardest things for many government officials to understand is that resident spending does not contribute to economic impact. It would have been spent locally anyway, just on something else.

Or is it that elected officials don’t care when it comes to gambling because it hauls in taxes. Visitor spending (any non-resident visiting for purposes other than school or work) is the only true economic value added.

Despite the incredible increase in gambling casinos, the proportion of visitors who travel 50 miles or more and participate in gambling has remained at about 6%

Take a performing arts theater, as another example with the same 6%-7% appeal to visitors. Residents attending events in these facilities don’t count as economic impact.

They would have spent the same amount on leisure anyway, in fact they may redirect what they spend from another leisure activity.

Performers then? Nope, they take their cut and send it back to where they live. Employees? Residents, yes. Commuter spending work-side is small. Spending on purveyors? Only if they are local, meaning based in the same county as the theater.

Additional visitors then? Under the overarching brand promoting the community as a whole, spending by up to 20% of day-trippers who come just for the performance could be attributed as impact from the facility.

A new study shows that even any development spurred is limited to that same area.

There is a consumer behavior called “access to opportunity” which means that the more opportunity there is do something, the less urgency there is to do it. Its why attendance at touring Broadway shows peaked in the mid-1990s when the number of cities/theaters exploded.

Gambling may reach that tipping point soon. Several states are already in decline. About half of Americans now play the lottery and one third gamble in casinos like the ones Mugs and I see along the roadsides.

Telling is that casino gamblers are much more likely to play the lottery, more than a third more likely among younger adults.

Americans now lose $119 billion annually to gambling, up from $10.9 billion in 1982 and nearly double at the turn of the century. The portion lost in casinos peaked in 2006, plummeted during the great recession, and has now bounced back.

Only 16% is generated in Las Vegas, about 8% from Atlantic City, half from the top ten locations including four other metro areas. The industry now relies on new casinos, a sign it is plateauing.

At the same time, the amount of true economic value added is declining as fewer and fewer are drawn from beyond the local area. The impact for tribal casinos comes from a transfer of funds from other parts of the economy, just desserts, I suppose.

Another sign that gamblers are staying closer to home is the sea change underway in Las Vegas. In 1984, casinos accounted for 59% of the spending on the Strip, now even after the recovery it is down to 36% and gambling revenues are well below what they were in 2007.

Trip spending while in Las Vegas is down 23%. What’s left is more likely to go to nightclubs ad shows, shopping and dining. The proportion now whose primary purpose is to gamble is not much more than the proportion there primarily to visit friends and relatives.

The proportion there to attend a convention or meeting has fallen to 7%, half the proportion seven years ago and less than a fifth of the proportion there for pleasure.

While the percentage there primarily to gamble is consistent among repeat visitors, it drops by 75% among first time visitors. The 24%reporting that they would be “more likely” to visit Las Vegas even with more places to gamble elsewhere has plummeted to 24%.

Attendance at events in the convention center there are now down to what it was when it was half its current size, a reflection of the continuing decline in conventions and meetings nationwide as well as attendance at events.

During their stay in Las Vegas, those in my former profession may be witness to the fact that destinations are shifting away from gambling and conventions and because interest in pure fantasy is also waning, possibly shifting back to the authenticity of its sense of place.

My guess is eventually, gambling may fall back as a backdrop and instead of creating fantasies of other places, the Strip may return to its far more genuine and broadly appealing roots.